Key Points
- Natural gas is the cleanest fossil fuel. It also is the quickest growing fossil fuel.
- Natural gas today accounts for about a quarter of global primary energy demand.
- Alongside renewable energy sources, natural gas is considered as important to transition to a lower-carbon energy system.
Global Energy Usage
Global primary energy consumption is increasing. If we look at the breakdown of sources of energy during the time period 1965 – 2018, oil consumption rose 2.5% annually on average, continuing to have the largest share (33.6% in 2018). Coal increased by 1.9% annually on average (share of 27.2% in 2018). Natural gas consumption rose at a larger pace than oil or coal, with an annual average of 3.3% (share of 23% in 2020). Nuclear energy and renewable energy had the highest average rate of increase (9.2% and 12.4%, respectively), but their shares are still small (4.4% and 4.0%, respectively), due to large costs. [1][7]
Natural Gas αs α Source of Energy
Natural gas is a form of fossil fuel, consisting of gases such as methane. It is found deep underground, at around a depth of 500 to 2000 meters. Natural gas forms in a similar way to coal and oil; it is formed when the layers of plants, animals and other materials are under pressure and heated. Some natural gas is found in spaces between layers of rock, and some can be extracted from tiny pores in formations of sedimentary rocks. [11]
From around 2007, it became technologically possible to extract natural gases from a type (layer) of rock called shale, which vastly increased usable reserves. This is often referred to as the shale revolution. In 2018, the reserves-to-production ratio, which represents the amount of fuel left in terms of years (if we continue to use natural gases at the current rate), was calculated to be 50.9 years. Natural gas is considered the cleanest fossil fuel. Compared to coal, it emits less harmful substances: 30% less CO2, 40% less nitrogen oxide, and no sulphur oxide. [2][12][13]
Reserves, Production, Consumption, and Trade
Since 2010, 80% of growth in natural gases has been concentrated in three regions: the US (leading the shale gas revolution), China (with economic expansion and concerns about air quality) and the Middle East (natural gases as an economic alternative of oil). [6]
In 2018, world reserves were 196.9 trillion m^3. Regions with highest shares were the middle east (38.4%) and Europe / CIS region (33.9%), which makes natural gases more geographically spread out compared to oil reserves. It is currently predicted that there are 214.4 trillion m^3 of shale gas (a new form of natural gas mentioned earlier) left to mine. [2]
Total natural gas production in 2018 was 3.9 trillion m^3, with an average increase of 2.5% over the last decade. Regions with largest production were Europe / CIS region (29%) and North America (26%). There are strong increases in production in China and Russia as well. [2]
In 2018, natural gases experienced a 4.6% increase in consumption, which accounted for about half of the increase in global energy demand. The Europe / CIS region had the largest natural gas consumption (56%), because it has the largest production and readied infrastructure. Previously, consumption in Asia was low, because of the difficulty of transferring natural gas as a gas using a pipeline. Consumption in Asia started to increase rapidly after natural gases was liquefied into LNG (liquefied natural gas) during transportation, which compresses the volume to 1/600 of the original volume. LNG also made it possible to use natural gas as a transportation fuel. New LNG projects are being funded in regions like Australia and the US to meet the rising demands of natural gas. [2][4][6][11]
If we look at the primary energy breakdown of individual countries, natural gases make up 30% of US energy usage, 25% in OECD + European countries’ energy usage, and 23% in Japan. In the US, after the shale revolution, environmental policies were made to transfer from coal to natural gas, resulting in an increase of market share higher than any other energy source since 2010. In 2010, natural gases used to make up 17% of energy usage in Japan, but after the Tohoku Earthquake in 2011, a large portion of nuclear power was replaced with natural gas. [2][10]
Total natural gas trade in 2018 was 1.2 trillion m^3 (which means 32% of produced gas was exported to another country). There are two ways to transport natural gases: to use a pipeline to transport as a gas, and to transport as LNG. Pipelines are used for 65% of all trade, major exporters being Russia and Norway, and major importers being the US and Germany. LNG use accounts for 35%, major exporters being the Middle East (especially Qatar), and major importers being Asia (and especially Japan). The US started LNG exports in 2016, increasing year by year. The shale revolution generally lowered natural gas prices, but prices depend largely on transportation fees, making the prices of the LNG type fluctuate and more expensive (especially because gases typically need to be kept below -160℃ to be liquefied!). [2][8][10]
Future and Problems
Natural gas consumption in 2020 is expected to drop 4% due to mild winters and the COVID-19 pandemic, but the growth is expected to increase afterwards. Europe has experienced less switching from coal and oil to natural gas (with the exception of the UK). However, with lower natural gas costs and a higher CO2 emission pricing, a larger share of natural gas is expected in the near future. [9][10]
Until 2024, the Asia Pacific region (especially China) is predicted to account for about 60% of the increase in total natural gas consumption. China and India are expected to become major LNG importers, and the US and Australia are expected to become major LNG exporters. Moreover, the US and China are expected to contribute to over 50% of total increase in natural gas supply. [8]
In IEA’s (International Energy Agency) Sustainable Development Scenario, natural gases are considered to be a cleaner alternative to coal and oil. Natural gas, alongside renewable energy sources, are gaining importance relative to oil and coal in the process of transitioning to a lower-carbon energy system. [3][7]
[1] Japan Agency for Natural Resources and Energy. (2020). “Trends of Global Energy – Overview of Energy Demand and Supply”. https://www.enecho.meti.go.jp/about/whitepaper/2020html/2-2-1.html. Last Accessed: 2020/07/15
[2] Japan Agency for Natural Resources and Energy. (2020). “Trends of Global Energy – Trends of Primary Energy”. https://www.enecho.meti.go.jp/about/whitepaper/2020html/2-2-2.html. Last Accessed: 2020/07/15
[3] BP. (2019). “Demand and supply of fuels”. https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/demand-by-fuel.html. Last Accessed: 2020/07/15.
[4] BP. (2019). “Natural gas”. https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/demand-by-fuel/natural-gas.html. Last Accessed: 2020/07/15.
[5] BP. (2019) “BP Energy Outlook 2019 edition”. From https://www.bp.com/. Last Accessed: 2020/07/15.
[6] IEA. (2019). “World Energy Outlook 2019 – Gas”. https://www.iea.org/reports/world-energy-outlook-2019/gas#abstract. Last Accessed: 2020/07/16.
[7] IEA. (2020). “Gas” https://www.iea.org/fuels-and-technologies/gas. Last Accessed: 2020/07/16.
[8] IEA. (2019). “Gas 2019 – Analysis and forecasts to 2024”. https://www.iea.org/reports/market-report-series-gas-2019. Last Accessed: 2020/07/16.
[9] IEA. (2020). “Gas 2020”. https://www.iea.org/reports/gas-2020. Last Accessed: 2020/07/16.
[10] IEA. (2019). “The Role of Gas in Today’s Energy Transitions”. https://www.iea.org/reports/the-role-of-gas-in-todays-energy-transitions. Last Accessed: 2020/07/16.
[11] EIA. “Natural gas explained”. https://www.eia.gov/energyexplained/natural-gas/. Last Accessed: 2020/07/16.
[12] Robert Strauss Center “The U.S. Shale Revolution”. https://www.strausscenter.org/energy-and-security-project/the-u-s-shale-revolution/. Last Accessed: 2020/07/16.
[13] Hokuriku Gas. “Advantages of Natural Gas”. https://www.hokurikugas.co.jp/company/environment/merit.html. Last Accessed: 2020/07/16.
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